The lithium battery copper foil market competition pattern is changing

The competition in the lithium battery copper foil track is becoming increasingly fierce, and it has become a trend for leading companies to further develop and grow by integrating industry resources. On the other hand, in order to ensure the stability of copper foil supply and reduce costs, power battery companies have deployed the supply of lithium battery copper foil by signing long supply orders, investing in shares, and establishing joint ventures.

The competition of battery companies to take shares in copper foil companies will also have a significant impact on the overall market competition pattern of lithium battery copper foil. In addition, the need for power batteries to improve energy density and safety performance is also accelerating the application of new materials. Due to its high safety, low cost, strong compatibility and other performance advantages, composite copper foil is considered to be a good substitute for traditional lithium battery copper foil.

It has attracted great attention from battery companies, and lithium battery copper foil companies are facing new challenges. The power battery production capacity is moving towards the TWh era, which will generate massive market demand for lithium battery materials, and the previous pure supply and demand cooperation model between material companies and battery companies will change.

Lithium battery material companies need to comprehensively upgrade in terms of production capacity, products, technology, capital, supply chain, etc. in order to meet the development needs of leading power battery companies.

Lithium battery copper foil industry opens mergers and acquisitions

On October 20, Nuode New Materials announced that the company is planning to purchase 100% equity of Jiangxi Tongbo Technology by issuing shares and paying cash. The private equity fund (hereinafter referred to as “Kaibo Fund”) that Nuode shares intends to initiate and manage with Kaibo Capital will increase its capital by RMB 1 billion in cash to Fujian Jingjing copper foil Co., Ltd. (“Jingjing copper foil”). Construction of a new project of Jingjing copper foil with an annual output of 25,000 tons of electrolytic copper foil.

After this capital increase, Nuode shares will hold 47.0588% of Jingjing copper foil, the company will become the single largest shareholder, and Jingjing copper foil will be included in the company’s consolidated statements. Tongbo Technology was established in August 2016. Its main products are electronic copper foil and lithium battery copper foil. The main products are high-performance ultra-thin electronic copper foil above 6 microns (inclusive). The company’s customers include battery companies such as CATL, BYD, and EVE is a company that produces cylindrical 18650 batteries.

Jingjing copper foil was established in May 2011, mainly engaged in the R&D, production and sales of 4-8μm double-sided photoelectrolytic copper foil for lithium batteries of new energy vehicles, and reached cooperation with battery companies such as CATL, CALB, SVOLT.

Nuode shares said that the acquisition/capital increase merger of companies in the same industry will help the company to steadily expand copper foil production capacity, increase market share, optimize the competition pattern, and further strengthen the company’s overall competitiveness. Nuode shares’ acquisition of Tongbo Technology and Jingjing copper foil released a major message that the industrial integration of the lithium battery copper foil industry has begun.

Leading copper foil companies with production capacity scale effects, cost control capabilities and deep binding with major customers will further enhance their comprehensive competitiveness by integrating small and medium-sized copper foil companies. At the 2022 High-tech Lithium Battery Materials Conference, Chen Yubi, executive vice president of Nuode shares, said that to stand out in the future market competition, lithium battery copper foil companies need to have outstanding competitive advantages in the market, products, technology, production capacity, supply chain, etc.

Nuode shares has deployed production bases in Qinghai, Huizhou, Huangshi, Guixi, etc. The total production capacity of electrolytic copper foil has now reached 70,000 tons/year, and the planned production capacity is 105,000 tons. In the next five years, Nuode shares will also increase investment in production capacity, expand new production bases around the world, and strive to reach an annual production capacity of 300,000 tons by 2027.

Under this circumstance, Nuode shares integrates the two copper foil companies, and can integrate its existing production capacity and customer base into the company system, quickly realize the expansion of copper foil production capacity, further increase market share, and strengthen the company’s competitive advantage in the field of lithium battery copper foil.

“At present, there are many participants in the lithium battery copper foil track market, and companies are expanding production on a large scale, but there are not many companies that really have the scale of production capacity, cost control capabilities and technical advantages.”

Dr. Luo Jia, President of Telford Technology Sales, said that with the intensification of market competition, some small and medium-sized copper foil companies cannot be deeply bound with leading power battery companies. In the future, it will be gradually integrated by the industry, and the market concentration of lithium battery copper foil will become higher and higher.

According to statistics, in 2021, the number of lithium battery copper foil capacity expansion enterprises in China will exceed 25. In 2022, China’s copper foil industry expansion competition will be further upgraded, the number of copper foil enterprises will further increase, and the new single project will have a larger production capacity and a faster speed.

It is estimated that by 2025, the total production capacity of lithium battery copper foil in China will exceed 2 million tons, a year-on-year increase of more than 6 times. The future market competition of lithium battery copper foil will be more intense. Industry insiders pointed out that with the gradual release of new production capacity, the tight supply of lithium battery copper foil will be eased, and it is expected that there will be excess capacity in the second half of 2023.

At the same time, overcapacity will drive down processing fees, and the price of superimposed copper raw materials will drop. Power battery companies are also requiring copper foil companies to continue to reduce product prices. Copper foil companies will face huge pressure and challenges in reducing costs. With the escalation of market competition, some small and medium-sized copper foil companies and new entrants that do not have core competitive advantages,

In the fierce market competition in the future, it will be eliminated, or become the target of mergers and acquisitions of leading copper foil companies, and the market share of lithium battery copper foil will concentrate on leading companies.

Power battery enterprise cooperates with copper foil companies

With the continuous growth of power battery shipments and the large-scale expansion of production capacity, having a strong, complete and diversified supply system has become the core competitive factor for power battery companies to participate in future market competition. An obvious change, under the pressure of tight upstream supply and skyrocketing prices, power battery companies have extended their raw material procurement projects from the four main materials to more upstream precursors, lithium salts, additives and other basic raw materials, and the supply chain has been further elongated.

In this process, high-quality lithium battery copper foil has become a resource that power battery companies compete for. Signing a long-term supply order, investing in shares, increasing capital, and building a joint venture have become an effective way for battery companies to supply lithium battery copper foil, reduce production costs, and improve product profitability.

In March 2021, CATL invested in Telford Technology through its Chendao Capital strategy, holding 3.87% of the shares; Subsequently, LG Chem also strategically invested in Telford Technology, holding 4.69% of the shares. At the same time, Ganfeng Lithium, Wanxiang 123 and Shengtun Mining also participated in the investment. Telford Technology’s strategic investment from CATL and LG Chem at the same time is a landmark event in the copper foil industry.

Since then, battery companies including SVOLT, Funeng Technology, BYD, Gotion Hi-tech, Sunwoda, and Zhuhai Guanyu have also invested in other copper foil companies. For example, Funeng Technology invested 62.07 million RMB to become its fourth largest shareholder through its wholly-owned subsidiary, and became its fourth largest shareholder, holding 3.54% of the shares; SVOLT invested 37.24 million RMB to become its seventh largest shareholder, holding 2.12% of the shares.

Huaxin Materials has completed a new round of strategic financing. After the completion of this round of financing, EVE indirectly holds 2.5201% of the shares; CATL indirectly holds 2.2051%; Gotion Hi-tech indirectly holds 0.63%; Sunwoda indirectly holds 0.63%; Zhuhai Guanyu indirectly holds 0.63%, and Huayou holds 69.5167%.

Guoxuan Hi-Tech also invested in Tongguan Copper Foil, and one of the top 5 energy storage battery companies BYD invested in Tongbo Technology. Battery companies are rushing to invest in lithium battery copper foil companies, indicating that battery companies have an urgent need to ensure stable supply of lithium battery copper foil and maintain stable prices.

Driven by the rising prices of copper raw materials and processing fees, as well as the growth of downstream market demand, the price of lithium battery copper foil has risen sharply in recent years, and the cost of lithium batteries has risen rapidly. In the first half of 2022, the cost ratio of lithium battery copper foil in the 5-series ternary battery has risen to the third place, second only to the positive electrode and electrolyte. The proportion of cell cost in other material systems has also risen to varying degrees.

The value of lithium battery copper foil has evolved from key auxiliary materials to core main materials, and has become a key link in maintaining the stability of the supply chain of power battery companies. Under this circumstance, the power battery company’s stake in the copper foil company will be deeply bound, which will provide guarantee for the supply of lithium battery copper foil and reduce the procurement cost.

It is worth noting that the current lithium battery copper foil market has not yet emerged as an absolute leader, and the market concentration is significantly lower than that of positive electrodes, negative electrodes, separators and electrolytes. Under this circumstance, power battery companies have invested in copper foil companies one after another, which may have a significant impact on the future competition pattern of lithium battery copper foil market.

Composite copper foil is emerging

In order to improve battery energy density and safety and reduce costs, lithium battery copper foil is developing in the direction of high density, thinness, high tensile strength, and high elongation. Among them, composite copper foil has the performance advantages of improving battery safety, improving energy density, reducing manufacturing cost and strong compatibility.

The composite current collector is a kind of “sandwich” layer made of polymer insulating resin PET/PP and other materials, and metal copper is deposited on the upper and lower sides. A new type of lithium battery material with a sandwich structure of “metal conductive layer-PET/PP polymer material support layer-metal conductive layer” is made.

Compared with traditional copper foil, the composite copper foil has the advantages of solving battery safety problems (puncturing will not cause burrs to cause internal short circuits), improving energy density (up 5%-10%), reducing manufacturing costs (reducing more than 50%), and improving cycle life (up 5%), and strong compatibility (compatible with lithium/sodium/solid-state batteries) and other advantages.

Based on this, leading power battery companies have taken the lead in establishing research on composite copper foil, and have even installed them for testing, showing their strong interest in composite copper foil. Under this circumstance, the composite copper foil track is heating up rapidly, attracting many industrial chain companies to compete for layout. Since 2022, a number of listed companies have announced to invest in the construction of composite copper foil projects, and huge equipment orders have been placed one after another.

Among them, Jinmei New Materials, Hanyu New Materials and other companies have achieved leading advantages in the industrialization of composite current collectors, and have already sent samples to downstream customers, and even started large-scale mass production.

Faced with the challenge that composite copper foil may replace lithium battery copper foil on a large scale in the future, traditional copper foil companies such as Nuode shares and Telford Technology have carried out research on the industrialization of composite copper foil. It is reported that Nuode shares has established a test line for composite copper-aluminum foil materials, and is already in product sample testing, which can be customized according to customer needs.

De fu technology is also developing composite current collector products and sending samples to customers for testing, at the same time, it is also researching and developing other new materials by using the technology of producing composite copper foil, and exploring application opportunities in other fields.

However, composite copper foil is still facing bottlenecks such as immature production equipment and processes, low production efficiency and low product yield, and is still in the period of technological improvement as a whole, and there is still a certain distance from large-scale industrialization.